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With nations across Africa having some of the highest percentages of the unbanked in the world, NCBA Bank has turned to digital innovation to improve the lives of many people across its home nation of Kenya and, increasingly, across other East African nations, like Uganda and Tanzania.
Eight years ago, NCBA Bank established M-Shwari digital platform with Safaricom, enabling customers across Kenya to access real-time financial services. Today, the M-Shwari platform hosts over 35 million users, and NCBA is recognised as one of the leading innovators in the African financial sector.
Mobile banking is appealing to the people of Africa, as bank cards tend to involve high handling fees, cutting into the limited incomes that many live on. On the other hand, mobile devices have a penetration rate of 112 per cent and local financial services institutions can offer cheap transactions via mobile.
This does pose a technology challenge to the bank, however, a digital platform requiring data confidentiality, anti-hacker and anti-fraud security mechanisms, and the scalability and efficiency to handle millions of transactions per day will be an enabler for inclusive financial service. NCBA turned to Huawei to resolve this challenge. Eric Muriuki Njagi, Group Director for Digital Business of NCBA said, “We have a view or a mission to be Africa’s most valued digital platform for financial services which then means we are seeking to move to not just identify ourselves as a bank but actually identify ourselves as a marketplace upon which financial services are offered, upon which customers can then find innovations that impact positively their daily life. So that also was a primary motivation for the investment we made with Huawei and the continued collaboration with them.”
Huawei and its partner, MuRong Technology, conducted a thorough analysis of NCBA bank’s services and its IT infrastructure, and subsequently rolled out Kenya’s first digital core banking system with distributed architecture for NCBA. Built on a distributed DevOps framework, the next-generation digital core banking system provides agile and robust technical support for NCBA Bank’s digital financial services. On the first day of operations, the system migrated data from 60 million accounts all at once, reaching 420 TPS at the peak of system performance.
To ensure that the system remains stable, the core banking system features Huawei’s private cloud platform for centralised resource management and flexible provisioning, while GaussDB supports night reports and the more complex queries to minimise the cost of databases. The OceanStor Dorado all-flash storage facilitates quick rollout of services for customers. This distributed system can also scale horizontally, process highly concurrent requests, and eliminate single point of failure (SPOF).
The result is a platform that sets NCBA up for the next decade of growth and scalability, while also reducing the TCO, improving system reliability to 99.99 per cent, and backing e-banking system migration and financial service innovation in the future.
(Read more about this story and the resulting benefit for NCBA bank here)
Through Huawei’s FinTech solution, the mobile payment platforms have been able to deliver more for Kenya’s communities:
– 50% Higher Crop Yields – Mobile payments enabled a “One Acre Fund,” which provides loans and technical training to farmers, with flexible repayments that can be made at any time during growing season. With such flexibility, farmers can grow more corps when they have sufficient money.
– Easier accesses to education– Mobile payments have made it possible to pay for tuition fees in less than a minute, saving poorer families the challenge of losing work to travel to a bank to withdraw cash.
– Made electricity cheaper – Innovative Pay-As-You-Use mobile payment options have allowed families to install solar power solutions that have reduced the cost of lighting by nearly 90 per cent.
Delivering to the unbanked
When it comes to reaching the unbanked, traditional financial institutions have struggled to meet the unbanked’s needs with financial services. Typically, these people have simple requirements; they need easy and immediate access to electronic funds when they need it (many traditional banking structures have been too inflexible and inconvenient to meet the unbanked’s needs), and they need for the bank to provide these services without any significant fees or added expenses. The most common reason that the unbanked persist in avoiding financial services is the perception (real or imagined) that they lack enough money to put into banking, and that if they do fees will scrape away at their money.
And yet, as noted by the World Bank, addressing the challenge of the unbanked needs to be a priority around the world. As noted by the report, Fintech is seen as the pathway to affordable financial services, which is critical for both poverty reduction and economic growth. And, at a time where face-to-face and physical interactions are seen as having risk, consumers are flocking to digital banking services to transact. This alone offers health benefits by reducing the amount of physical money that is communally touched and transferred, which helps minimise one common cause for virus transference.
This challenge – and the potential in addressing it – was a core focus of the Huawei Intelligent Finance Summit 2021, which ran from June 3-4. Already a world leader in financial services, having managed 300 million users, 500 thousand agents, and $200 billion in transaction value per year, Huawei used the event to unveil its Intelligent Finance Cloud Engine I5 model, which is specifically designed around assisting banks with transformation and digital services. The five components of the I5 model are:
Firstly, Robotic Infrastructure (unified management and control, end-to-end automatic deployment, intelligent O&M and fast service provisioning, energy-saving, high reliability, and intelligent financial digital infrastructure), as well as deeper Data Intelligence and Analytics and Agile Innovation. In turn, financial organisations can leverage these attributes to gain market share in growing areas such as Financial Inclusion and embedded digital financial services (Industrial Finance).
Brought together, these five components provide financial services with both transformation and a platform for future-proof, sustainable growth. As banks increasingly engage with the unbanked, the pressures on the IT environment will be exponential, and the impact of outages, downtime, or unreliable systems all the more pronounced. With the Smart Finance Cloud Engine I5 model, these financial institutions will be able to continue adding value for their customers with new products and solutions, leveraging an open platform with more than 400 APIs, while maintaining the critical security and stability of their environment.
Huawei is working with more than 2,000 financial services customers across 60 nations, including those with large unbanked communities, like Kenya, Pakistan and Myanmar. On the other end of the scale, it also counts almost half (47) of the top 100 banks as its customers. This depth and expertise have allowed it to present a vision for the future of financial services that are inclusive, socially responsible, and will help banks rise to meet the next wave of challenges in this increasingly digital world.
All of this speaks to Huawei’s stated goal of delivering “New Value Together”. It is not just about delivering technological benefits to banks, but also reducing world poverty, helping to mitigate the ongoing impacts of the global pandemic, and driving positive social change through healthier economies.
For more information on Huawei smart financial services solutions, click here.